Ball in Washington’s court on India-US interim trade pact before July 9

By Admin

07 Jul, 2025

As the July 9 deadline looms, the spotlight is now on Washington to finalise the much-anticipated interim trade pact with India. Following a series of high-level discussions and firm negotiations, India has clearly outlined its non-negotiable positions especially in sensitive sectors like agriculture and dairy leaving the next move to the United States.

India Draws Its Red Lines

Sources involved in the negotiations confirmed that India has established firm boundaries on key issues. “India has drawn its red lines… now the ball is in the US court,” they stated, adding that the pact’s announcement hinges on whether Washington is ready to move forward within these parameters.

The discussions have gained urgency due to the 90-day suspension period of a steep 26% tariff imposed by the US on April 2. This reciprocal tariff, part of a broader policy impacting multiple nations including India, is set to expire on July 9. If the trade talks collapse, the tariffs will automatically come into effect, significantly impacting Indian exports.

India Seeks Tariff Exemptions

India has been pushing for full exemption from the additional 26% US tariff while the 10% baseline tariff remains in place. There is growing concern that failure to conclude the interim pact could lead to these punitive tariffs being enforced, impacting sectors like steel, aluminium, and automobiles, where existing duties are as high as 50% and 25%, respectively.

Despite the tight timeline, Commerce Minister Piyush Goyal made it clear last week that India will not be pressured by deadlines. “India does not enter into any trade agreement based on deadlines. It will only accept a deal that is fully finalised, properly concluded, and in the national interest,” he said.

Sensitive Areas: Dairy and Agriculture

India has taken a firm stance against granting duty concessions in agriculture and dairy sectors that are not only politically sensitive but also critical to rural livelihoods. India has never opened up its dairy sector in any previous trade deal, and this remains a significant sticking point in the current negotiations.

The Stakes for Both Sides

From the US perspective, the proposed pact seeks market access in sectors such as industrial goods, electric vehicles, wines, petrochemicals, apples, tree nuts, and alfalfa hay. Meanwhile, India is eyeing concessions in labour-intensive sectors like textiles, gems and jewellery, leather, plastics, chemicals, oil seeds, shrimp, and horticulture products.

If successful, this interim pact would serve as the first step toward a broader Bilateral Trade Agreement (BTA), which both sides are targeting for completion by fall (September–October) this year.

Trade Relationship in Numbers

The US has been India’s largest trading partner since 2021-22. In the fiscal year 2024-25, the bilateral trade in goods reached $131.84 billion, with India enjoying a trade surplus of over $41 billion. India's exports to the US rose 21.78% to $17.25 billion during April–May 2025, while imports jumped 25.8% to $8.87 billion.

The two-way trade in services has also surged, rising from $54.1 billion in 2018 to an estimated $70.5 billion in 2024.

Key Export-Import Items

India’s major exports to the US include:

• Drug formulations and biologicals: $8.1 billion
  
  

• Telecom instruments: $6.5 billion
  
  

• Precious and semi-precious stones: $5.3 billion
  
  

• Petroleum products: $4.1 billion
  
  

• Jewellery: $3.2 billion
  
  

• Cotton garments: $2.8 billion
  
  

• Iron and steel products: $2.7 billion
  
  

Top imports from the US include:

• Crude oil: $4.5 billion
  
  

• Petroleum products: $3.6 billion
  
  

• Coal and coke: $3.4 billion
  
  

• Diamonds: $2.6 billion
  
  

• Electric machinery: $1.4 billion
  
  

• Aircraft and parts: $1.3 billion
  
  

• Gold: $1.3 billion
  
  

Strategic and Economic Ties

Beyond trade, the US is also one of the top investors in India, with $70.65 billion in cumulative FDI between April 2000 and March 2025. Key sectors include IT, professional services, technical services, and manufacturing.

Looking Ahead

With just days remaining, there is cautious optimism but also rising tension. President Trump recently indicated that the US has begun issuing formal communication to a group of 10-12 countries regarding reciprocal tariffs, which are expected to come into effect from August 1 if no resolution is reached.

As the clock ticks down, the outcome of this interim trade deal could not only redefine India-US commercial ties but also set the tone for future free trade agreements. Until then, the ball remains firmly in Washington’s court.